The Long Tail of Banking

The current idea of niche banking October 12, 2009

Currently, if you Google “niche banking,” the first article you’ll get is at http://www.commercialappeal.com/news/2007/jun/29/execs-plan-new-niche-banking-firm-in-miss/.  The headline this article is “Execs Plan New Niche Banking Firm in Miss.”.  Then, in the second paragraph, there is a quote from the organizer, “We’re going to be a commercial and private bank.”  The articles goes on to explain that the founder has a vision to create banks “catering to small and medium-sized businesses and individuals who need everything from banking service to insurance and investment advice.”

This, my friends, is the current idea of niche banking.  Small and medium sized businesses, and individuals, who need anything at all?  Wow, that’s really narrowing it down. Way to identify segment that market into niches, folks.  Exactly who is NOT included in your target market, then?

Of course, this is also the reason there’s a market opportunity for Nicheruptive, so I shouldn’t complain.  But the point is clear: the banking industry’s idea of what a niche market is (and why you might want to serve one) has got to change.  Today, “regular banking” is like this:  we’ll accept anyone who can fog a mirror. Using this metaphor, today’s idea of niche banking, then, is like this:  we’ll accept anyone who is an individual or business with less than 250 employees and can fog a mirror.  See the problem?  This isn’t niche banking at all–this is merely taking a target market definition from 60,000 feet to 58,000 feet.

A real niche bank would identify its market much much more specifically, knowing that it was intentionally excluding more customers than it was catering to. More on this topic, of course, to come.